Personal Contract Hire

How it works
Personal Contract Hire (PCH) gives the user a fixed equal monthly rental for a fixed contract term and mileage. At the end of the contract the vehicle is simply handed back.

Popular with...
Company car drivers who are given a car or mileage allowance instead of company vehicle. It allows the individual to make his/her own choice and arrangements. This will avoid benefit-in-kind taxation.

Risk
The funder assumes the risk of the residual value of the vehicle.

Advantages

• Low initial outlay
• More tax-effective than a Personal Contract Purchase (PCP) if the vehicle is used partly for business use
• The contract is not subject to a final balloon payment
• The contract generally includes road fund licence at the current rate for the complete term of the agreement
• Maintenance of the vehicle can be included as an option

Disadvantages

• It is costly to early terminate the agreement
• It is important to correctly assess your annual mileage as an excess mileage applies at the end of the agreement. It may however be possible to reschedule your mileage during the contract if you incorrectly estimate it, or your circumstances change

Summary
Overall, a convenient and hassle-free funding method with tax advantages.